London, Dec 04: Steel billionaire Lakshmi N Mittal has said China will pose a threat to the steel industry as it becomes the world's leading steel producer, consumer and a significant exporter in the next decade. ''While our industry is clearly benefiting from the demand surge from China, it also represents the greatest challenge to our industry in the medium term. Steel prices have risen as capacity utilisation has improved due to China's demand."

''However, the combination of buoyant demand and a structurally attractive cost position is leading to a sharp growth in new capacity in China,'' the chairman and CEO of the LNM group said on his 10-year vision for the global steel industry at a conference in Paris.

He, however, warned: ''Here lies the risk to the industry. Changing your assumptions on China's GDP growth rate from 7 per cent to 5 per cent post-2008 can alter expected consumption by more than 50 million tonnes per year. Given the typical time lags in capacity building there is a real risk of over capacity, which would make China a substantial net exporter within the next ten years.'' One of the Britain's richest business tycoons, Mr Mittal said: ''Within ten years we are likely to see a handful of truly global players accounting for 80-100 million tonnes each and with a footprint in all the major regions.''

''These large, global players will selectively invest in their upstream facilities to optimise costs, transferring some semi-finished product across regional boundaries,'' Mr Mittal said.

Outside the steel industry, consolidation and globalisation is well advanced. ''Think of the oil industry and the emergence of the mega-majors yet in steel, the top ten steel-makers only produce 25 per cent of the world's crude steel production,'' said the London-based non-resident Indian businessman.

On world trade, Mr Mittal said, ''although the past decade has seen globalisation forces in the ascendancy, this may well change in coming years. Few saw the recent WTO meeting in Cancun as a victory for global free trade. In contrast, trade relations between the US and the EU have since deteriorated with a number of disputes in danger of boiling over.

''Free trade blocs such as NAFTA and the broader European Union are likely to be more important in the future, creating barriers for inter-regional or global free trade.''

On world currencies, he said, ''in the developing world, management cannot rely on exchange rate differences to continue to support a structural advantage. A future world may revolve around a limited number of main currencies - the Dollar, the Euro, the Yen and the Remnimbi.'' Bureau Report